Michigan Senate Bill SB0561

Michigan 2025-2026 Regular Session

• Introduced: 9/18/25
• Refer: 9/18/25

Caption

Sales tax: distribution; distribution of sales tax revenue for the revenue sharing trust fund; provide for. Amends sec. 25 of 1933 PA 167 (MCL 205.75). TIE BAR WITH: SB 560'25, SB 559'25

Impact

The enactment of SB 561 will fundamentally alter how sales tax collected within Michigan is distributed. Specifically, 15% of the collections from the state’s general sales tax will be directed to cities, villages, and townships under the Glenn Steil state revenue sharing act, thus providing essential financial resources to local governments. Meanwhile, the bill mandates that a significant 60% of general sales tax collections are deposited into the state school aid fund, ensuring adequate funding for educational institutions. The preservation and allocation of these funds reinforce the state’s commitment to education and local governance.

Summary

Senate Bill 561 proposes amendments to the General Sales Tax Act (1933 PA 167) specifically targeting the distribution of sales tax revenues. At its core, the bill aims to ensure that a portion of collected sales tax is allocated to various funds including the general fund, state school aid fund, and other designated transportation and municipal funds. The bill stipulates specific percentages for distribution, which are aimed at enhancing support for local governments and educational needs, while also addressing transportation funding requirements efficiently.

Contention

While the bill is supported by those who see it as a necessary tool for enhancing funding to critical public sectors, there is concern regarding its long-term implications for fiscal management. Critics may argue that relying heavily on sales tax revenue could lead to instability in funding if consumer spending fluctuates drastically. Additionally, there may be debates surrounding the distribution methodology and whether it truly meets the diverse needs of different communities across the state.